It's not a case of the bond holders not wanting to convert the bonds to stocks, it's the only feesable chance to get any return on a bad investment. Pennies are still better than nothing and that is what a bond would be worth when the bancruptcy happens.

I tell you if I were a bond holder, I would tell JO that I would hold him personably responsible when the stocks are worthless. The point I would make to him is that I could hold his feet to the coals on the bond repayment and tell him sorry but I want my money and interest now but if he coverts me to stock on nothing but wishful thinking and a slick presentation, we are coming after him personally for selling snake oil.

Convertable corporate bonds are great but not when your only chance of retrieving your investment is a long, long shot.